HB 463 GRETCHEN BOWMAN, ESQ. NHS OF GREATER CLEVELAND

What is a foreclosure?  A foreclosure usually seeks three things:  A money judgment finding that the borrower was loaned a certain amount of money, at a specific rate of interest, and that they have not been repaid;  A judgment finding that the mortgage is a valid lien on the property; and  A court order authorizing the sheriff to sell the property and apply the proceeds to the judgment obtained by the mortgagor.

Does foreclosure take a long time? The Ohio Supreme Court monitors the length of time all cases in Ohio are pending. The goal is to have all foreclosure cases resolved (taken to judgment) in one year or less.

Where do we stack up? Metric Ohio Cuyahoga County Cases Pending 1/1/2014 New Cases 2014 Reactivated 26,131 43, ,830 6,226 7,041 2,731 15,998

” “ Time to Foreclose Only 5% of all the 15,998 cases heard in Cuyahoga County in 2014 took longer than 12 months to resolve.

What can slow a foreclosure case? Home is Occupied  Borrower wants to keep the home, and the bank voluntarily ceases to actively prosecute the foreclosure while they explore resolution options.  Borrower files a bankruptcy, sometimes involving a 5-year repayment plan to the bank.  Home is not an attractive foreclosure prospect. Home is Not Occupied  Borrower is deceased and heirs must be located and served with notice.  Borrower files bankruptcy.  Home is not an attractive foreclosure prospect.  Loan servicing transfers, and new servicer fails to pursue foreclosure in a timely manner.

Who decides when to sell a foreclosed property?  The bank can request a sheriff’s sale if they have obtained a judgment against all of the parties (people and other lienholders) who have an interest in the property.  Nothing in the law currently requires the party that obtains a foreclosure judgment to execute it right away.

Changes Proposed by H.B. 463

Overview and Comparison Proposed/Pending Change  Creation of a “good faith” negotiating requirement. Current Law  Common law requires that parties to negotiations participate with good faith and clean hands. Enforcing the current law can be a challenge for homeowners.

Overview and Comparison Proposed/Pending Change  Allow cases to be re-opened when a judgment was obtained without first serving the borrower with the foreclosure complaint. Current Law  Court Rule 60 allows a court to reopen cases after a judgment under limited circumstances.  The Ohio Supreme Court has interpreted this rule to mean that cases cannot be re-opened just because a bank did not have the standing to bring suit.

Overview and Comparison Proposed/Pending Change  Updating Ohio’s Uniform Commercial Code to allow for the enforcement of lost, destroyed, or stolen promissory notes in a wider variety of circumstances. Current Law  Ohio revised code section currently allows only those that were in possession of promissory notes when they were lost to enforce them. HB would allow those who obtain the right to enforce a note from a party that had lost it to enforce it.

Overview and Comparison Proposed/Pending Change  If a property has not been taken to sheriff’s sale for 12 months after a foreclosure judgment is obtained by a bank, the local municipality can step in and ask the sheriff to schedule a sale. Current Law  Most courts do not monitor whether or not, or how long it takes, for a bank to decide to execute on its foreclosure judgment.